Founder Profile

Pew is an independent nonprofit organization – the sole beneficiary of seven individual trusts established between 1948 and 1979 by four generous and committed siblings. Learn more about one of our founders: Mary Ethel Pew.

Overview

Bank accounts are an essential financial product, used by 9 in 10 American households, and need to be safe
and transparent. Account agreements and fee schedules provide customers with account costs, terms, and
conditions. Among the largest U.S. banks, however, the median length of checking account disclosure documents
is 40 pages, and the information is presented in varied formats with inconsistent wording, making it difficult
for consumers to easily find the information they need to comparison shop, avoid overdraft and other fees, and
manage their money.

To increase the transparency of checking accounts, The Pew Charitable Trusts developed a model summary
disclosure box, similar to a nutrition label for food, that provides clear and concise information about fees, terms,
and conditions. The 12 largest banks, which together hold more than half of U.S. deposit volume, and the three
largest credit unions have adopted a similar summary box that meets Pew’s criteria for effective disclosure, but
the required information is not consistently formatted. Unlike nutrition labels mandated by the Food and Drug
Administration, however, the adopted boxes are not easy to compare because no rules require clear, concise, and
uniform disclosures for checking accounts. As a result, consumers may still struggle to compare accounts and
determine which would best meet their needs.

This brief summarizes the results of a Pew-commissioned experiment that tested the effect of uniform versus
dissimilar disclosure formats on participants’ ability to compare accounts. Half of the nationally representative
sample of adults viewed summary boxes that were uniformly formatted and worded, and the other half received
disclosure forms with differing layouts and language.

The experiment found that uniform disclosures:

Made it easier for participants to compare account terms and conditions.

Increased participants’ confidence in their understanding of practices and fees.

Decreased the time users needed to identify account information.

Increased participants’ understanding of account fees and practices.

These findings demonstrate the benefit of uniform disclosure for consumers and align with previous Pew research
showing that 78 percent of checking account holders say that requiring banks to provide a one-page summary of
key information about their accounts’ terms, conditions, and fees would be an improvement. Accordingly, Pew urges the
Consumer Financial Protection Bureau to mandate clear, concise, and uniform disclosures for checking accounts—as it has
proposed for general purpose reloadable prepaid cards.

Suppose you want to open a checking account, and you&rsquo;re looking to see which bank has the best deal. It should be simple&mdash;you&rsquo;d just compare the terms and fees. But life is short, and you&rsquo;ve got better things to do. &ldquo;Make my life easy,&rdquo; you say. &ldquo;Give me information that&rsquo;s consistent and easy to compare, like those nutrition labels on food.&rdquo;